A correspondent lender is one who originates and funds a mortgage, but then sells it to Fannie Mae or Freddie Mac or a government entity like the FHA or VA. Correspondent lending helps alleviate the problems inherent in portfolio mortgage lending. With a portfolio lender, they end up keeping the mortgage they originated for up to 30 years while it is being paid off by the borrower. The problem with portfolio lending is that most mortgage originators have a limited supply of capital to make new loans. Hence, correspondent lending gets a fresh infusion of new capital to lend each time it sells off it’s loans. However, it’s also important to remember that correspondent lenders often times do service your loans, so they will collect your payment and maintain your escrow account. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe!
